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DOL Fiduciary News: May 31, 2017

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Fee-Based VA Filings Shatter Records

InsuranceNewsNet; May 30, 2017

With the Department of Labor’s new fiduciary rule set to go into effect early next month, insurers and annuity companies have reported a record 26 filings for fee-based variable annuities in the six-month period that began Dec. 1. That was the word from Morningstar.

New filings for fee- and commission-based variable annuities typically number about a dozen over a 12-month period. Insurers want to release fee-based variable annuities to give advisors and distributors more options under the fiduciary rule, which takes effect June 9.

Fee-based compensation is seen as one way to narrow compensation disparities in how agents are paid.

Retirement fees could rise 200% post-DOL, Chamber of Commerce warns

InvestmentNews; May 30, 2017 @ 4:52 pm

The U.S. Chamber of Commerce, which lobbied against adoption of the Department of Labor's fiduciary rule for retirement accounts, has published a report ("The Data Is In: The Fiduciary Rule Will Harm Small Retirement Savers" -- highlighting the negative effects the new rule will have on retirement savers.

The report is a collection of survey statistics and other data submitted by various organizations during the recent DOL comment period. Among its highlights are that service fees on retirement accounts could rise by as much as 200%, that up to 7 million individual retirement account owners could lose access to investment advice altogether, and that 70% of insurance service providers already have or are considering exiting the market for small-balance IRAs and small plans. 

Conflicted advice hurts retirement savings in every state [Economic Policy Institute]

May 30, 2017

In a new analysis, EPI’s Director of Policy Heidi Shierholz and Economist Ben Zipperer provide a state-by-state breakdown of how much retirement savers lose annually as a result of receiving on advice from financial advisers who have conflicts of interest. Annual losses range from $24.2 million in Wyoming to nearly $1.9 billion in California.

“The fiduciary rule will require financial advisers to act in the best interests of clients saving for retirement,” said Shierholz. “The Department of Labor should fully implement and enforce the fiduciary rule to protect the savings of working people.” 

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